Chicago Tribune: Downtown Market Sales and Prices are Holding Up
The Chicago Tribune discussed what parts of Chicago real estate are “hot” or “not” in its real estate section on Friday. (This is the article that Steven linked to.)
Apparently, no area is truly “hot” but the downtown market is holding up fairly well.
Lance Ramella, principal at Meyers Builders Advisors, summed up the sentiment of most who work in a residential real estate industry whose flagging fortunes have been well-documented.
“I wouldn’t call any market, in Chicago and anywhere else in the country right now, hot right now,” Ramella said. “Some markets are just better than others and it’s a relative term. Being better than horrible, that’s where we’re at.”
The experts say, it’s all about location, location, location. We’ve seen that as well, as more foreclosures are appearing in the outlying areas such as Rogers Park, Edgewater or Bronzeville than are appearing in Lincoln Park or Lakeview.
The “experts” like the Millennium Park/Loop area, although we’ve seen some foreclosures in buildings like The Columbian already.
Between this year and next, about 10,000 condominium units will come on the downtown market, creating a glut of inventory. Still, Gail Lissner, vice president of Appraisal Research Counselors, favors properties that are either close to North Michigan Avenue or are near the lake and with a view, properties loosely bounded by the Chicago River on the west, Randolph Street on the north and Roosevelt Road on the south.
“Right downtown, the whole quarter around Millennium Park, that whole area has a lot of legs around it,” she said. “It offers such a unique location and view amenity. You can’t go replicate this location at 10 other spots in the city.”
The Gold Coast is apparently one of the “hot” areas right now.
Chicago’s Gold Coast, comprised of residences in the 60611 ZIP code, also remains one of the better markets. Between Jan. 1 and April 30, 371 properties sold with a median selling price of $526,000, according to data from Midwest Real Estate Data LLC. That compares with 332 properties selling at a median price of $414,688 during the same period a year ago.
What these stats don’t tell us is the mix of the properties that were sold. Are these re-sale units or do these also include new construction? Even just one new highrise building closing could skew those statistics.
50 E. Chestnut, the luxury high-rise near Rush Street that has 34 units with only one unit per floor, has been closing on units in recent months. If that building is within the Gold Coast zip code, it would have only taken a few of those closings to skew the price stat.
The article says the South Loop is doing just fine. (Really?) And, of course, you can’t go wrong with Lincoln Park (which I think most chatterers would agree with.)
Meanwhile the South Loop, the scene of much of the current development activity, continues to hold its own. Sales are up from a year ago while average market time is down and the median selling price is relatively unchanged from a year ago.
“If the market is a little tighter, you’re better off investing in what would be considered a better area,” said Michael Golden, co-founder of Chicago-based brokerage @properties. “The best areas always perform the best. Lincoln Park is always going to be Lincoln Park, the Gold Coast is always going to be the Gold Coast. There’s always going to be up-and-coming areas [but] you’re betting a little bit.”
The article admits the up-and-coming areas are getting hit and getting hit hard. Take East Garfield Park which has great housing stock that is being refurbished. It’s near the Green Line and is a quick commute to downtown. But there was lots of speculation and “investment” that went on there in the past few years. It’s now falling back down to earth.
I’ve seen a pick-up in foreclosures in that neighborhood recently.
That means Chicago neighborhoods considered ripe for gentrification just two years ago aren’t so hot anymore. In March 2007, Business Week named East Garfield Park on the city’s west side as one of the nation’s 10 hottest housing markets. But a year later, there have been far fewer properties sold, the median price has been slashed in half and the marketing time has almost doubled.
When you read this article it makes you wonder where the reported 30% drop in sales year-over-year in the city in the first quarter even comes from.
Read the full article: Hot real estate market versus one that’s not [Chicago Tribune, June 6, 2008]
From the posts on you blog, we’re seeing that you CAN go wrong in Lincoln Park, as evidenced by some places you’ve posted on here at prices that are pretty steep rollbacks from 2005 prices.
South Loop strong? Huh? I hope people don’t believe the hype in the Trib.
Be careful, there is a lot of media bias out there. I’m sure the Trib and most other newspapers out there wont be talking about the down market very much. Remember the better the housing market the more money they make off of Real Estate listings…
“Remember the better the housing market the more money they make off of Real Estate listings.”
Huh? Aren’t there more listings when the market is poor?
The Trib has got to be one of the industry’s most prolific cheerleaders. The Thursday and Sunday real estates may as well have been written by the NAR. I don’t blame them too much because you don’t want to bite the hand that feeds you.
One quibble with your analysis, Sabrina: the median price in the Gold Coast won’t be affect much by one expensive building coming on line, unless it makes up a really large percentage of total sales. Medians are “physical” middles–half the homes selling above, half below. Stratospheric outliers won’t skew it, which is why it is a better measure than averages.
But not tons better–as you say, it still gets distorted by the mix of units. If relatively few cheap units fail to sell, the median will make the area look healthier than it is. The reason I don’t think that’s a good description of the Gold Coast is there just *aren’t* that many cheap units to “fall out.” If there are cheap units in the Gold Coast, people buy them.
I think areas like the Gold Coast *are* holding their own. My cynicism comes in when I consider timing. In a market drop, there is a rush to quality. People buy in the Gold Coasts when they might otherwise lay a bet on a South Loop. But if (as) credit conditions continue to deteriorate, even the “quality” areas should suffer. Do I think they’ll crash, like homedelete thinks? No. But I also don’t think “they’ll be fine! just fine!” like Heitman thinks. As G always reminds us, the credit market affects everyone.
Now have I not been saying location location location the whole time. Looks like I am not the only one claiming the staple areas are doing quite well.
Listen, I in no way believe the market is fine. I do however believe the better areas of the city will do fine over the next 3 – 5 years. They could remain flat or drop slightly but that is life. Will they fall out of bed? Only if the financial markets as a whole collapse. If this happens all of your assets (other than gold and oil) will decline inline with real estate.
Just my 2 cents
Steven,
Can you point us to buildings where resales are higher now than they were last year at this time?
Steven,
Only problem with your analysis is that people usually don’t leverage up on stock. But they do leverage up 5 to 10 times their money on real estate. Any drop, even if small, in real estate has drastic consequences. Additionally, RE is very illiquid and transaction (and holding) costs are very high.
So if you buy a stock but it drops 10%, all it takes is for your real estate to drop 1% to match that loss in equity.
A little frightening, don’t you think?
Sabrina – I have a spreadsheet I can send you tracking all Lincoln Park transactions over the past 3 years. Both closings and listings are down substantially.
Investor – Here is where I disagree. If you purchase a home, most people base their purcahsing power on their monthly cash out flow. How does a short term fluctuation in price effect you as a home owner? Your monthly cash out flow remains the same regardless of an increase or decrease in price. I think we all assume that the general direction on real estate will be up over the past 5 – 10 years. If you don’t think prices will go up over the next 5 – 10 years you should rent. Noone is smart enough to know where the exact botton will be. Transactions are down over 30% in the city (even Lincoln Park & Lakeview) and eventually the peole on the sidelines will be forced to either buy or sell. Most neighborhoods in chicago are transient and people come and go. I expect transaction (driven by those holding out) will force transaction up and pricing to stabalize come 2009.
I have to agree with steve. The better areas will do relatively better but the keyword here is ‘relatively’. Another way to put it is that some areas will do less worse than others, but nothing will remain unscathed.
The only thing downtown has going for it are oil prices, if oil shoots to 6 or 7, expect some changes in our lifestyle.
Steven,
If you think you’re the only one who has distinguished between central/premium neighbors and outliers on this site, you are an extraordinarily uncareful reader. The difference is that you are on the extreme end of sanguinity/complacency when it comes to Lincoln Park, Gold Coast, Lakeview. You’re on the tail-end of the normal curve when it comes to beleifs about these neighborhoods–a position whose incomprehensibility is emphasized by your belief in complete devastation of the South Loop. Your failure to understand that devastation in the South Loop wouldn’t entail serious consequences for the premium neighborhoods defies logic.
WOULD entail. Sorry.
Steve is only “on the tail-end of the normal curve when it comes to beleifs about these neighborhoods” when compared to the people on this website, which is not a representative sample of society, but instead tends to attract people who are routing for the market to collapse.
D
I am routing for the market to collapse. A return to affordability is a great thing. It means that future home buyers will spend less of their paycheck on housing and have more money for the rest of life’s necessities, like gas, food, health care and travel.
Homedelete – It shows your lack of general knowledge when you hope for a compete collapse in pricing. If your wish comes true our country will be in a deep depression and you most likely will be out of a job and out of a down payment.
I’m always amused at how bitter people get when the tables are turned.
Steven, I’m sure that you were rooting on the housing boom when it was going your way with utmost glee – despite the fact that the irrational price uprun meant many people who SHOULD have been able to afford a given home could no longer.
The sword cuts both ways – a total collapse is certainly a bad thing, but so is an irrational bubble.
I’m not rooting for a complete collapse, but I am pulling for more affordable housing. I was squeezed out of the big-city housing market because, silly me, I didn’t want to buy a place that I couldn’t afford. Meanwhile, millions of reckless spenders were driving up prices and making money hand over fist while doing it. d neighborhoo
So yes, I’ve been a responsible person for the last several years, and I see the current slump as an opportunity to finally move into a nice place in a big city. If that makes me a bad person, so be it.
Irrational bubble may be better described as housing for the “haves” vs housing for the “have-Nots”. You are not entitled to live in the best neighborhoods in the city unless you earn it. Certain areas will always be out of reach to the typical buyer.
Is oil, gold, college and milk prices a bubble?
Jack Pot – Which big city?
Hey G, are you trying a new screen name, Homedelete? Your strangely formal wording is a dead giveaway!
D
Is oil, gold, college and milk prices a bubble?
yes, yes, yes and yes
the current environment is deflationary inspite of specific categories showing inflationary behavior. Don’t confuse the trees for the forest. About 3 trillion dollars have disappeared from the economy due to housing and stock market crash, this is deflationary. The commodity prices are soaring due to deliberate dollar devaluation policy of the jokers ahem…powers to be and money moving out of real estate and stock market speculation (guess where the money which used to buy MBS is going).
But the useless rate cuts are now done, while europe will just begin their series of rate cuts. Expect dollar to strenghthen. Eventually all assets will decline.
“Homedelete – It shows your lack of general knowledge when you hope for a compete collapse in pricing. If your wish comes true our country will be in a deep depression and you most likely will be out of a job and out of a down payment.”
I have plenty of general knowledge and lots of specific knowledge too! House prices can ‘collapse’ without going into a deep depression. Just because you say something doesn’t make it true.
Pricing can return to pre-bubble levels and things will be just fine. Steven Heitman’s household finances might be in the great depression, but mine won’t be. I didn’t lever myself into a $500,000 three bedroom condo in the city proper so my finances will a-OK. Unemployed real estate agents/construction workers/mortgage brokers can absorb themselves into the booming healthcare and education industries.
Steven, lower home prices would be a great thing for you too – you make more money on volume that you do on incremental increases in prices! You see, the main reason home sales have dropped off a cliff is because they are TOO EXPENSIVE. Every problem in the real estate industry stems from the affordability issue. If home prices were lower, more people could afford to buy, and hence, you could theoretically make lots of money again!
sartre:
Europe will be raising interest rates – they just said so the other day. Some of the commodities boom is real and some is speculation. Everyone’s got their theories but I’m of the thought that things will work themselves out – it’s just a matter of timing.
Deaconblue:
I only wish I were G because he’s like 10x wittier with words that I could ever be. He’s a regular Oscar Wilde of the housing bubble.
Anyway, homedelete is a combo of two keys next to each other on my keyboard – home and delete. it’s purely coincidental that I use this name on a housing related board.
Sartre – The dollar is under valued but it will be years before you see it actually gain ground on the Euro or Sterling. The fed is no longer in control of the dollar (other than short term spikes / dips) and I doubt if you see anyone buy into our mess of a financial system any time soon. Oil in the $100’s is the real deal. Sure there is speculation driving the week to week spikes but the reality is demand is up and supplies are depleting. We import 75% of our oil. We get 15% of our oil from Mexico who are predicted to be net importers in the next 5 years. Where do you think we will go to get that 15% we lose from Mexico? Demand is growing far beyond our control and the result will be $200 oil in the next couple of years. Gold will follow oil while food is another story for another day.
Homedelete – When you talk about pre-bubble pricing what are you referring to? Which year would you consider the last of the normal appreciation years? And what would you consider a normal 10 year appreciation rate for real estate?
Steve,
I was referring mostly to Chicago. I lived there until 2003, and I’m looking at moving back in 2010. Until recently, I was convinced that I couldn’t buy unless I lived in a remote part of the city. With the downturn, however, I’m discovering that there are some very nice places in neighborhoods that I really like. And, judging from recent trends, I don’t see the market getting hot again over the next two years.
Steve,
the peak oil theory has its proponents, I am not one of them. If you take the 50% dollar devaluation since 2000, that accounts for significant % of the oil price spike. Several oil producing countries have dollar pegs which is driving their inflation rates out of control. The rest of the spike is money pouring into commodities since its the next speculative bubble. When this bubble bursts it will be as ugly as housing. This week asian countries are withdrawing oil subsidies, expect the demand to drop pretty rapidly.
Homedelete,
you think europe will actually raise rates to make euro even less competitive with a shrinking euro economy. Watch the bank of england facing increasing pressure for rate cuts. Also watch the . If euro crosses $1.60, expect some euro countries to start talking about pulling out of the union, this is serious business. Having said that the ECB has shown much more fiscal restraint than our bubble blowing, dollar trashing greenspan/bernake, so there may be something to your argument.
Steve said:
“eventually the peole on the sidelines will be forced to either buy or sell.”
Noone will be forced to buy. Some will be forced to sell.
Sartre read up on the realities of oil. While the recent run-up might be due to commodities speculation, it is well known in the investment community that oil production has plateu’d and will decline. None of the big US oil companies except Marathon are investing significant amounts into exploration–they know they aren’t likely to find significant economically recoverable quantities by doing so. Unless electric cars get here and quickly I see the rationale behind city-centric pricing long-term. 30 mile commutes to work from the suburbs are going to be untenable for most when oil his $200. Can Metra handle the increased capacity?
Bob,
“it is well known in the investment community that oil production has plateu’d and will decline”
oh really? since none of the OPEC countries publish their known reserves, you must be privy to information which is hidden from most of us. Draw a chart of oil prices against gold price rather than dollar and you will find your reality. Do you also account for slowing demand from a worldwide recession. Notice that we just had the biggest decline in number of miles traveled in US.
I agree that US has utterly mismanaged its energy needs with non existent public transportation, suburban sprawl and gas guzzlers. However, alternatives like telecommuniting, smaller cars and improved energy efficient housing are gathering quite a pace. Just this week my company announced a 4 day or 5 day with 1 day work from home week.
City centric housing has always made sense, but our system has become entrenched in bigger is better mentality. This is not going to change overnight. first and biggest of all–city schools have to improve. Second, the escape from suburbs will cause a suburban housing crash which can dwarf this one. But I think before any of this happens, we will have alternatives like I mentioned above in play.
BTW, I definitely do not think that our fed will do anything to prevent a dollar slide. Dollar support will come from across the pond.
So Sarte & Bob what you are saying is… if you are going to buy real estate buy in the city where there are good schools? Staple neoghborhood in Chicago will be just fine (Lincoln Park, Gold Coast, ect)
I am glad we all agree…
Oil prices will drive everyone back to public trans. Walk to the grocery store, walk to the train, walk just to walk…
Real Estate peaked first.
Stocks peaked second. (China down 50% from its spec bubble peak!)
Food – already peaked (Wheat down 40% from its spec bubble peak only months ago)
Oil will be last – but it will pop like all the rest – consumption is collapsing – growth in China has slowed- Iraq’s huge reserves will come on line – yada yada.
Nobody’s talking deflation, because it’s partially masked by currency weakness.
No steve, what I am saying is that before people move to the cities there will be other fundamental changes of lifestyle or rollback of commodities bubble. If the commodity bubble continues, expect housing to take an even bigger hit. When people need to decide between filling the gas tank or making that mortgage payment, guess what they will pick.
Well, there are so many factors contributing to price decreases, including the excess inventory, the end of toxic and subprime lending, the lack of wage increases for the average american and a host of other things. Expecting a standard straight line home appreciation to pre-bubble prices isn’t reasonable. Our standard of living may be lower – we will pay more for food, oil, healthcare, and such but that doesn’t change the fact that there are literally millions of vacant houses in america that aren’t going anywhere and the supply and demand for them primarily is primarily here. We can always cut back use of other commodities but we’ll still have too many houses. The market will work itself out and prices will work themselves out to a pont where the vacancies will decrease and housing costs will take up less of american’s budgets.
As far as all the other investment classes are concerned, there is a vast supply of money floating around in the world that’s looking for a home and that money is currently in commodities. Inflation is too much money chasing too few goods and until a good portion of that money disappears finds a new home we’re going to have a lot of price volitality in the various asset classes. There needs to be new goods created – new companies, new resources, new real estate, so the money in commodities can find a better less speculative home. This global money supply has distorted prices for everything around the world and until the chinese manufacturing money, the russian and arab oil money, etc, finds something else to invest in, things are going to be crazy. At least dubai is putting its money where its mouth is and investing in its infrastructure – instead of investing in american mbs and cdo’s. I am howver glad to see that these investors no longer consider lending ridiculous amounts of money to americans to buy overpriced homes as a good investment vehicle. It makes homes more affordable for everyone who refused to get caught up in the mania.
Chris,
its funny that the arguments from the peak oil crowd so closely mimic the housing bubble arguments. New economic model, not makning more land, buy now or be priced out…blah blah…
homedelete, complete agree. Let me also add that deflation is overall reduction in money supply, so we may be in commodities inflation but overall we are seeing serious deflation.
So where is all the money going to go when it comes flying out of real estate and commoditites? I just want to know where I can invest ahead of the curve.
“New economic model, not makning more land, buy now or be priced out…blah blah…” Our China, India, and Mexico not causing increased demand on commidities? Does the weekness in the US $ (Which was long over due) not lead to increased pricing on commoditites? Your whole argument is growth in the emerging markets will stop and the US $ will regain its losses? China has 10 times the people we do and they currently consume less commodities then we do. I wonder where the prices will be when China’s consumption mirrors ours? It is coming in the next 20 years…
Where does the money go? It disappears as assets are written down.
Q. Where would oil be trading today if Bear Stearns was allowed to fail?
A. A lot lower.
Oil is not the same as realestate, when it comsumed its gone for ever. There is a limited supply, and refinement capacity is severly limited. Growth in China is real and its not going away. Currently the annual usage of oil per capta in the US is 24.5 barrels annually. By contrast China usage per capta is 1.8 barrels. Everyone in China has the desire to own a car. I have worked in China and have seen first hand what is happeing in this country, construction under way there is amazing. Short term oil needs to pull back, but long term its going nowhere but up. I have made a significant deal of money in this market sector and long term its where you want to be. Sorry for beign completely off topic.
Doom-sayers have been calling for peak oil constantly for years, it’s just getting more attention lately because of the run-up in oil. There is likely more oil in Canadian oil sands than all of Saudi Arabia, it’s just expensive to get at! The reality, though, is that oil prices have far less impact than the media would have you believe. Is an extra $100 per month expense really going to caause a family to move from Naperville to the city? That’s a bad bet!
D
Yes there are the oil sands in Canada, but there are issues with capacity and how quickly you can get it refined. There is real limitation and capaicity issues here.
D I aggree with you and don’t beleive anyone will be moving due the cost of gas, they will probably trade in the two SUV’s for a couple of cars with good gas mileage. Also they might look for a job closer to home, reduce shopping trips, etc..
“So where is all the money going to go when it comes flying out of real estate and commoditites? I just want to know where I can invest ahead of the curve.”
Money supply is not a zero sum game as Chris succintly pointed out. When home equities were rising money was created out of thin air and into the thin air it vanished. Expect to see the same from other asset classes.
You forget that everything in your home got there because it was transported from the factory or farm field using oil. Everything you have in your apartment made of plastic originates wit oil in the ground. Oil is a lot more than just gas.
China, for the economic miracle that it is, will ultimately slow down, and is a long long way from becoming American. China despite its capitalist undertones has a lot of central planning and overt government regulation. History has shown the world time and time again that the best markets are free markets and a short term economic burst in China does not change this basic tenet of economics.
I agree that rising oil prices will not result in massive influx into cities. One could just as well argue that it will have the reverse effect: with rising gas prices people will cut leisure and vacation travel. This means fewer trips into major cities from those living in suburbs. This will result in a drop in successful retail in downtown areas along with less tax revenue and hence less money to upkeep cities. All of this will result in a decline in the attractivness of these major cities, causing many people to leave for the suburbs.
Not that I agree with this line of reasoning, but it is available and just as rational (if not moreso) as saying people will trade in their homes to save a thousand dollars or so a year on gas costs.
Investor – The trend to move out of the burbs and back to urban areas started long before oil became an issue. City living back for good. It just makes more sense than urban sprawl!
Deaconblue,
You are exactly right about Canada. But as you know the EROEI (energy return on energy invested) is a lot lower for those oil sands than it is conventional liquid oil.
In short our society grew up around cheap oil. The era of cheap oil is over and isn’t returning. There may/will be some economic pain along the way for our society to adjust to an energy model that doesn’t yield a 400% return on energy but maybe rather yields 30%.
The pain isn’t going to be that oil is running out. Its that cheap oil seems to be running out.
Maybe the effect isn’t enough to convince a well to do suburban family to move closer to the city, but consider those at the margins. Higher oil prices will cause some to move closer to their job. Perhaps this effect will buffer the low end moreso than the high end.
Steven,
What makes you so sure that trend won’t reverse? Why “city living back for good”? And why does it make “more sense”? You can’t argue against people’s preferences.
Investor – Because the burbs suck. I think everyone knows that. I deal with people’s housing situations everyday and 9 times out of 10 people move to the suburbs becasue they can longer afford city living. The people that can afford stay in the city with their families. Again, this is 90% of the people I deal with.
The suburbs don’t suck if you have kids that need to go to school! I would love to stay in Chicago forever but once my kids are school age there aren’t many good options unless you want to send your kids to private school. I think good schools will send people back to the city far before higher oil prices do. I seem to recall that the 70’s had horrendous oil prices and most cities suffered horribly during that decade.
D
Am I supposed to take seriously the argument “because the burbs suck”?
And then you offer up anecdotal evidence.
I know a lot of people who move to the burbs becase they want more space, safer neighborhoods, a usable backyard, good schools, etc.
You offer a lot of soundbites, but no real arguments.
There’s only a handful of neighborhoods in the city that I’d even consider raising a family in. I don’t think it’s any big secret that a significant portion of the city is about as desirable an area to live as a toxic waste dump. If the city were such a great place then the suburbs would have never developed. People choose to live in Glenview or Orland because the quality of life is incalculably better than most of the square mileage within the city limits. I don’t know how this is going to affect gas but I can say with certainty that hundreds of thousands of people, my parents in Rolling Meadows included, will never return to the city. These people will take Melrose Park over Jefferson Park any day of the week.
Look at Detroit. I was just there a few weeks ago. The citizens abandoned the city proper and never looked back. They set up shop in the surrounding areas and made them just as nice as the city was prior to the blight. Chicago is the same way. Pigs will fly before yups like us return to a glorious and rebuilt Englewood to raise a family in the City. Me, I’ll see y’all in DuPage or Kane County around the time my children reach jr. high. I’ve always been quite fond of Geneva, with the river and the quaint downtown, it’s such a nice place to raise a family…if only I could find a way to shorten the commute downtown….
Homedelete,
One thing Chicago has going for it which the politico correctos will gasp in horror at is that it is still largely segregated. THOSE PEOPLE are largely relegated to the south side, along with their metal detectors and irresponsible behavior and lack of family structure along with it.
Yes I said it. Detroit proper never had de facto boundaries where _those people_ knew they didn’t belong.
Who are _those people_? I think we all know (no they’re not mexican). But if you need me to compare FBI arrest statistics with population data to show which population groups commit a hugely disproportionate amount of violent crime per capita I can do that too.
Now I await the verbal assaults of those who have never lived outside their ensconced enclaves of suburbia or the northside. Or their complicated “sociology” theories that have no basis in reality, far less than Mendel inheritance.
Deaconblue,
I know nothing about the schools but from appearances there are neighborhoods in Chicago that seem like nice places to raise a family. The city is big.
I’d rather my kids learn about reality firsthand than from watching MTV. Some of the most well grounded people I know here in Chicago grew up in such neighborhoods as Beverly, Bridgeport, center north, etc. These people have 10x the streetsmarts I see from younger people who grew up in an isolated burb.
I guess it comes down to whether you feel comfortable with your offspring adopting false ideals if it means they are physically (and generally) safer..
In light of the above, I think it’s safe to say that the value of this discussion has been exhausted, and I suggest we move to the next thread.
Steve,
I can’t speak to the specific details of the oil market but what I do know is that part of the run up in oil prices is due to GENUINE demand. There is a growing middle class in China and India whom in turn are buying cars whhich they need gas for, actual consumer consumption. The boom in housing in the US was driven significantly, but not exclusively, by investors buying condos and sitting on them in the hopes of flipping them for a profit. That is not genuine demand, not consumer consumption. That would be like me filling up large drums with gas in the hopes that the pricing going up so I could sell it for more than I bought it.
Homedelete –
“rout” is a when your troops or team is soundly defeated.
“root” is what you do when you are cheering for your team to rout the other team.
sorry for the typo with the rout/root. I was distracted by the post above me which first used ‘rout’ instead of ‘root’.
Let’s not make this a grammar forum.
No, instead let’s make it a place to spew racist garbage. Anyone out there who is reading this blog for the first time? I have no sense that Bob’s views are dominant, or even a significant minority. So, please don’t dismiss us prematurely.
Going back to the original premise of the article I am a bit dismayed that people are still talking about “hot” areas. What is the goal of such questioning? Are people still looking at homeownership as some kind of investment opportunity? If so, that’s a big mistake. That’s how we got into the current mess. You can’t predict what kind of return you are going to get in any particular area of the city. Furthermore, the “hot” areas are going to get you less for your money. Better to look at housing for what it is – a place to live. And don’t live beyond your means in the hopes that some kind of appreciation is going to save your ass.
BTW, Sabrina is right about the mix issue in median prices. I’ve weighed in on this endlessly. Median prices ARE affected by the mix of housing sold and can be significantly skewed. That’s why I track the Case-Shiller index.
I grew up in the city and loved it. My suburban friends were always incredibly bored on weekends whereas I always had fun things to do. I was lucky enough to attend private school with a group of very smart kids (most of whom lived in the city). I remember one kid’s parents lived in the Indiana and his parents got him an apartment (he was about 16) in the city just so he could attend school here. My point is that there are great schools in the city, but you have to pay for them. People end up paying for the great schools in the suburbs through very high property taxes. Of course, taxes in Chicago are atrocious at this point. I almost want to leave Chicago just to get away from the mayor’s insanely high taxes.
homedelete:
I don’t think most people, including suburbanites, would rather live in Melrose Park than Jefferson Park. Melrose Park has problems with their schools (District 89 and 209), crime, and corrupt city departments such as the police department that the FBI is familiar with, etc. etc. Perhaps you meant Park Ridge instead of Melrose Park.
Bob is not racist. He simply stated an uncomfortable truth that everyone is aware of. If you disagree, put your money where your mouth is and “snap up” one of those super cheap Englewood homes.
The median is very deceiving, especially when refering to all sales in a zip code like 60611. The data quoted from Midwest Real Estate Data LLC accounts for all closed sales in the MLS from 1/1-4/30 for 2007 and 2008. That means a mix of resales and new construction (with most of those contracts signed 1-2 years prior.) I went through the data and removed the obvious new construction/conversion sales. Here is some data on those breakdowns (columns are 2007/2008/% change:)
All Resales count = 234 203 -13%
All Resales median = $379,500 $441,000 16%
All Resales average = $610,230 $654,919 7%
Count of those reporting unit size = 181 160
Median $/SF = $357 $377 5%
Average $/SF = $392 $402 2%
All New Const/Conv count = 96 166 73%
All New Const/Conv median = $496,950 $623,500 25%
All New Const/Conv average =$841,923 $938,332 11%
Count of those reporting unit size = 70 158
Median $/SF = $450 $496 10%
Average $/SF = $469 $584 25%
For the obviously NOT new construction or conversions:
Sales $2M+ count = 8 6 -25%
Sales $2M+ median =$2,950,000 $3,750,000 27%
Sales $2M+ average =$3,819,250 $3,387,500 -11%
Count of those reporting unit size = 6 6
Median $/SF = $893 $638 -29%
Average $/SF = $864 $676 -22%
Sales $1M -$2M count = 26 32 23%
Sales $1M -$2M median =$1,200,000 $1,375,000 15%
Sales $1M -$2M average =$1,279,135 $1,421,734 11%
Count of those reporting unit size = 23 28
Median $/SF = $503 $531 6%
Average $/SF = $512 $516 1%
Sales $700K-$1M count = 26 19 -27%
Sales $700K-$1M median =$815,000 $835,000 2%
Sales $700K-$1M average =$815,765 $832,763 2%
Count of those reporting unit size = 24 18
Median $/SF = $440 $435 -1%
Average $/SF = $423 $439 4%
Sales $500K-$700K count = 25 32 28%
Sales $500K-$700K median = $575,000 $585,000 2%
Sales $500K-$700K average = $579,790 $580,172 0%
Count of those reporting unit size = 21 28
Median $/SF = $363 $384 6%
Average $/SF = $385 $398 3%
Sales $300K-$500K count = 62 42 -32%
Sales $300K-$500K median = $380,000 $392,500 3%
Sales $300K-$500K average = $385,728 $396,536 3%
Count of those reporting unit size = 52 35
Median $/SF = $350 $358 2%
Average $/SF = $358 $359 0%
Sales under $300K count = 87 72 -17%
Sales under $300K median = $227,000 $225,000 -1%
Sales under $300K average = $222,558 $223,412 0%
Count of those reporting unit size = 55 45
Median $/SF = $312 $307 -1%
Average $/SF = $313 $315 1%
“My point is that there are great schools in the city, but you have to pay for them.”
There are a number of great schools in the city that you don’t need to pay for, too. Just because “everyone” you know who has kids is moving to the burbs doesn’t mean that everyone who can afford to is. My kids are going to CPS unless/until there’s an actual problem and we could well afford to move to Winnetka, Naperville or wherever.
There are a handful of great schools in the city. They’re called magnet schools. The demand is high and slots are limited. The three ways to get accepted are: pay someone off; be politically connected; or be extremely lucky and win the lottery. There are a handful of other good non-magnet schools located around the city – Bell, Edgebrook, etc. However, to attend, you must buy a $500,000 condo or an $800,000 house. Edgebrook is slightly cheaper at $650,000 but houses are slightly smaller and your modern furniture will barely fit into the living room.
I think you’re exaggerating a bit on the price for good neighborhood schools. For example, Ogden seems like a perfectly fine elementary and serves most of River North (river to North, except Old Town) plus all the buildings north of Grant Park and east of Michigan. While Streeterville and Gold Coast are pricey, the western part of that district (bounded by, say, LaSalle, Chicago, and the river) seems more reasonable — look at the places along Larrabee and Kingsbury up to 800 N, or the “great lake” streets up to about 500 W. That said, the high school for that area (Wells) seems rather iffy.
Personally, I’ve been searching in eastern Lincoln Park or northern Gold Coast, looking for a place in either Lincoln or Ogden elementary and in Lincoln Park high districts — pricey, but you can get 2200 sqft for $500K in those districts (look at 1 E Schiller condos).
I expect that other parts of the city have excellent neighborhood schools, although I would guess that the boundaries aren’t as sharp as between Lincoln/Ogden and Manierre/Schiller/Jenner (Cabrini-Green and Old Town).
South Loop elementary (serving the Loop south to 18th) appears to be rapidly improving. Give it a few years and it could be both quite good and stable. The high school (Phillips) does not offer such hope.
Kevin:
Yep, high school in the issue. LPHS is okay, and has the excellent IB program, but ALL “good” high schools in the city are selective enrollment. But you are right that hd exaggerates the difficulty of finding a good neighborhood elementary school. Also, when comparing to the good city schools, there aren’t a lot of suburban options that are dramatically cheaper for comparable schools unless you go far away from the city. Yes, almost all suburbs get you a better neighborhood school than an “average” city school, but you need to compare apples to apples.
Homedelete,
Before you spout off too much about something you clearly know nothing about, you should really look up some stats at ISBE.net. Standardized test scores are very similar comparing the city schools to the all-state averages. Controlling for some of the effects of income (i.e. comparing Chicago non-free-lunch kids to statewide non-free lunch kids), the standardized test scores are almost EXACTLY the same.
It’s completely incorrect to say “The Suburbs” have good schools and “The City” has bad schools. Some suburbs have good schools, and some are piss-poor. The good ones are in places like Hinsdale and Wilmette that are just as expensive as private school tuition. Average ones are in places like Lisle and Mundelein that are affordable, expansive, and a 90-minute drive from the loop.
“Before you spout off too much about something you clearly know nothing about, you should really look up some stats at ISBE.net. ”
Duh, read the Trib article last year. 6 out of every 100 students in the CPS high school system get college degrees…..duh. i.e. Schurz or Clemente. (http://www.studentclearinghouse.org/about/news/pdfs/ChicTribune_101306.pdf)
Duh, Stevenson High School in Lincolnshire – 96.5% graduate and continue with postsecondary learning. errrrrgh… (http://en.wikipedia.org/wiki/Stevenson_High_School_(Lincolnshire,_Illinois)
Me know nothing, me attend CPS and can barely read, write or argue coherently with facts. Me shout off mouth but me know nothing.
The good schools in Hinsdale and Wilmette are expensive, yes, but tuition is already paid for through property taxes. Sending kids to private schools in the city isn’t cheap and you don’t get a rebate for your property taxes either.
It takes more than just test scores to make a school good. Overall childhood development opportunities are the most important factor, and one of the hardest things to evaluate.
Just Curious,
“Average ones are in places like Lisle and Mundelein that are affordable, expansive, and a 90-minute drive from the loop.”
I don’t know about Mundelein, but we live close to Lisle (Naperville) and from what I know Lisle High School is very good, ranked 120 out of 609 high schools in Illinois. And the metra train from Lisle can get you to the loop in less than 40 minutes. We drive in to DePaul to see our son about once a week during the school year, ususally around 11am, and travel back around 2pm, and it takes us about 45 minutes each way. Granted we travel outside of rush hour, but we’ve been noticing less traffic lately, probably because of gas prices. So be careful making statements not backed up by your personal knowledge…
Jenny,
This is not a high tax city, relative to peer cities like NY, LA, etc. Our income tax and property taxes are very low (New York City has its own wage tax, in addition to the income tax you pay to the state and the feds, for example). Cook County property tax policy is such that residential property taxes are artificially low while commercial property taxes are artificially high. This is partially made up for with high sales taxes and various fees (many of which are used in those other cities as well). Run the numbers with doubling your property tax and increasing your state income tax from 3% to 6-9%, and you’ll find you come out waaaaay ahead in the Chicago system. Your overall tax burden is significantly lower here than any other city of comparable size with comparable cultural/entertainment/economic amenities.
Homedelete:
You’re also cherry picking data. People who point out *one* house that sold for a profit do the same thing.
Did you miss the part where it said 2.4% of Stevenson’s students come from low-income families? That number is 80% for Chicago Public schools, and it’s 40% statewide. Did you consider that not everybody can afford a college education?
CPS Test scores are average. If you want to say “Stevenson is good, even if Lincolnshire is a long drive from the Loop” I won’t argue. I’ll observe that Payton is better. Then you’ll say “New Trier is good,” and I’ll observe: “Whitney Young is better.” And we’ll play the ridiculous cherry-picking game until one of us finds something better to do.
The scores are (Grade 11)
Reading (Warn / Below / Meet / Exceed)
CPS (All Students) 14.4 26.6 37.1 22.0
State (All Students) 11.9 25.2 38.1 24.7
CPS (Non Free Lunch) 12.3 23.6 38.7 25.5
State (Non Free Lunch) 9.4 21.5 39.3 29.7
It’s a myth that the CPS is a cesspool of underachievers and dropouts. Their scores are basically the same as any other school you’d pick at random.
OK – you send your kids to Clemente and I’ll send mine to Stevenson. Let’s leave it at that.
HD:
Okay, you live in Lincolnshire and we’ll live in the city. And in that case, you can stop complaining about how expensive housing is in the city.
Well put, Anon.
At the risk of beating a dead horse, the “magnate schools are inaccessible to the regular Joe” concept is also somewhat unfounded. Total enrollment at CPS high schools was around 88,000 last year. Total enrollment at Northside, Young, Payton, Jones, and Lane Tech was about 9,200. These 5 schools are in the top 2% statewide. So 10% of CPS High School students go to one of the top 2% of all schools in the state? The poor schmucks in Schaumburg (ranked #113) should be so lucky.
That also doesn’t consider programs like IB at LPHS. But enough about the mediocrity of suburban schools…this is a blog about Chicago real estate, right?
JC:
“magnate” schools? Now that’s a funny typo. I think magnate schools are pretty exclusive, but the magnet schools are more generally available.
Isn’t Trump having one of his informational forums soon? That would qualify as a magnate school, wouldn’t it?